Goldman Sachs Loses Battle with Largest Public Union in U.S.

Ever wondered why CEO of Goldman Sachs hasn’t been fired yet?

Realizing the pressure of a recent shareholder resolution, Goldman Sachs was able to get the largest public employee and health care workers’ union in the country, AFSCME, to pull their proposal regarding Lloyd Blankfein’s role as both CEO and chairman of the board. Originally, the proposal was to be voted on in the upcoming May shareholder meeting and had the potential to garner a majority vote hence kicking Blankfein out of this dual role. AFSCME was concerned about the conflict of interest inherent in having one person essentially managing himself. In exchange for pulling the proposal, Goldman agreed to change its board structure and appoint a “lead director” to its board.

Coincidentally, this action taken by Goldman comes less than a month after disgruntled employee Greg Smith wrote the New York Times Op-ed Why I am Leaving Goldman Sachs. In this sultry piece Smith describes the dilapidated culture at the investment bank referring to clients as “muppets” and has now many large investors questioning the ethics at the 143 year old firm.

President of AFSCME, Gerald W. McEntee, released a statement on their agreement with Goldman stating:

“Wall Street greed and conflicts of interest drove our economy into a ditch.  This move is a step in the right direction to make sure Wall Street CEOs are held accountable to their shareholders and that taxpayers are not on the hook for their risky bets.  AFSCME members participate in state and local government pension plans that are clients of Goldman Sachs.  As clients we’re concerned that the practices of Goldman are not in the best interest of the clients they serve. The appointment of a lead director will provide a much needed and vital check on the company’s practices and conflicts of interest.”

Though Blankfein will remain in the dual role capacity as both CEO and Chairman, this newly appointed lead director’s roles include challenging executives about risks along with running the boards’ executive sessions. If this actually gets done remains to be seen.  Approximately 250 companies of the S&P 500 have a lead director in place, up from 165 in 2006.

One shareholder resolution that remains on the 2012 ballot is through my company, Napa-based investment firm, Harrington Investments Inc., which urges the Board of Directors to adopt a policy stating that upon contract renewal or in future contracts, executives will be required to retain 75% of the shares acquired through the Company’s compensation plans, excluding tax-deferred retirement plans, for at least 3 years from the termination of their employment.  Of course, this proposal will remain on the ballot unless Goldman bows to the requests of the resolution.

Dale Wannen

Dale Wannen is President of Sustainvest Asset Management, an investment advisory firm focused on sustainable and responsible investing (SRI). Prior to Sustainvest, Dale was a portfolio manager at Harrington Investments and specialized in ESG investment strategies, securities analysis, and shareholder advocacy. Prior to this position, Dale was a financial advisor with UBS Wealth Management Services in San Francisco. He is often a guest speaker on the topic of ESG investing and shareholder advocacy.Dale has an MBA in Sustainable Management from Presidio Graduate School in San Francisco. He earned a B.A. in Economics from Rowan University and currently is a volunteer with Mentor Me Petaluma, Rebuilding Together Petaluma, and the founder of Green Drinks Petaluma.He also currently sits as Board of Director and Treasurer of San Francisco human rights organization, Global Exchange, teaches Economics for the Oakland non-profit Game Theory Academy and is a committee member for the National Resources Defense Council (NRDC) in San Francisco. Previous volunteer work has included Treasurer and Board Member for bird conservation organization, San Francisco Bay Bird Observatory (SFBBO), committee member of the Petaluma Pedestrian and Bicycle Advisory Committee (PBAC), and President of the Social Venture Finance Club at Presidio Graduate School.Dale currently holds the Series 65 FINRA license and has previously held the Series 6, 7, 63, 66 and California Life and Health Insurance Certification. He is a member of National Association of Professional Financial Advisors (NAPFA) and the Financial Planning Association (FPA).Dale lives in Petaluma, CA with his wife Lauri and their Malamute Shadow.